The laughable Bank of Canada report even includes the line
Why did this increase in markups not contribute significantly to inflation? We show that markup growth reached its highest level because of a contraction in firmsโ costs [...] during the pandemic-related public health interventions
So when their costs go down they keep the prices the same and pocket the difference, BoC report verdict "profit growth without inflation". So what happens when costs go back up?
We observe a mild contribution of markup growth to inflation in 2021, partially explained by demand rebounding faster than costs. However, the fact that markup growth fell to zero the following year indicates that firms were likely smoothing out their price increases [...] rather than leveraging increases in market power.
So when the costs go back up, they pass 100% of the cost to the consumer and keep their new higher profit margins (no change in markup). BoC verdict "the inflation has nothing to do with profit growth". Amazing!
If industry follows this "price ratchet" mechanism profit margins can go to infinity "without causing inflation" according to BoC. Absolutely galaxy brain levels of economic genius.
They really think we're idiots.
While I haven't read the full report, I've never seen an assessment review the entire supply chain that is usually vertically integrated.
"costs go up" isn't some event that happens only because of drought/war/etc. It's true that resources are not always equally available, and prices can reflect this.
But when a supply chain is nearly entirely vertically integrated within 3 monopolies (oligopoly), there are plenty of costs that can be raised just because.
If there are 5 steps in the supply chain from farm to shelf, and the farm costs go up, every step in the supply chain can raise costs. If someone owns the entire supply chain, there are now 5 opportunities for someone to pay themselves, funded by the end consumer retail price.
It's painfully obvious that the lack of competition is encouraging unmitigated greed. They're using half assed myopic "studies" to suggest record profits aren't because of Greed since the last stage of the supply chain isn't exclusively where the gouging happens as if it's the only place profits can occur.
Yup, it's super easy to blame the costs and shrug when you're the one that controls most of the costs. Vertical integration is how companies create monopolies without running afoul of monopoly laws. Regulations need to catch up to modern behavior.